RIP the online exchange

Long live the trading grid

  • alert
  • submit to reddit

The essential guide to IT transformation

Opinion In the heady days of the dotcom boom, online exchanges grew with surprising rapidity, touted as the ultimate platform for more efficiently communicating and trading with business partners. Not many survived.

With public exchanges, the main problems with the model espoused centred around getting suppliers and customers connected to a platform that, in most cases, merely provided a way of exchanging documents electronically. Few exchanges got close to the panacea of being able to analyse trading patterns to improve performance in order to reduce inventory levels, better manage invoices and orders, and streamline logistics.

There have been many casualties among technology vendors offering exchange technology or facilitating online auctions via exchanges, the most recent apparently being Commerce One, which saw revenues drop from $62m in Q2 2000 to just $2m in Q2 2004. And this is just the last in a string of casualties over the years as exchanges have folded as their participants realise that they have failed to live up to the promises.

However, some online exchanges remain, with notable examples being those that have provided value-added services to a like group of participants - an example being Asite, an exchange for the construction industry that enables collaborative project management online. Others, such as Transora, which serves the consumer goods industry, and the Worldwide Retail Exchange appear to have quietly morphed into offering data synchronisation services for members, rather than full exchange services.

So was the model broken? Private trading exchanges fared rather better - mainly because they were, primarily, set up by large companies that wished to form a deeper collaboration with their trading partners, often establishing a VPN connexion to their largest suppliers. And this is a model in which one vendor, GXS, excelled. Long known as a provider of EDI connectivity and value-added networks, GXS, which was formerly a subsidiary of GE, has quietly been building out its services to provide the full range that were once promised in the great exchange gold rush of three or four years ago.

Now, just as others are faltering, GXS has announced its Trading Grid offering - the "grid" in the name pointing to the "on demand" nature of the services offered in the grid computing model. This Trading Grid offers the basic infrastructure required by companies that wish to collaborate with trading partners online, including real-time information flows, centralised repositories, order management and invoice reconciliation for high volume of information flows.

With a long heritage of supporting small and medium businesses, Anthony Payne, group development manager for GXS, explains that around 80 per cent of the company's customers are smaller businesses. Rather than this being a new focus for the vendor, it is rather a renewed effort to cater to their needs. Participation by smaller companies has also been one of the main bottlenecks for companies trying to set up online exchanges, since very few had the means or budget to participate in exchanges - especially since different trading partners were mandating the use of different exchanges, complicating the landscape further.

To encourage participation by smaller companies, which often make up a high percentage of suppliers to large companies, GXS has built out a B2B framework based on web services, enabling faster and easier connexion and solving many of the headaches involved in integrating with exchange frameworks. GXS is pushing these capabilities with the motto "no trading partner left behind" and promises to enable a new level of process integration and business intelligence that other models have failed to deliver.

The idea behind online exchanges was sound but, as with any new technology, hype preceded ability to deliver. Web services technology suffered a similar fate at first, before being incorporated into many technology implementations. Taken together, these technologies mean that the elusive promise of online trading networks comes closer to being reality. And GXS has the pedigree to deliver, since this is merely an extension of a business that it has developed over many years. The little known secret in the world of exchanges was that, while public exchanges were failing to deliver, many companies that developed private exchanges were doing very nicely - they just didn't want the world to know because these trading networks were, by their very nature, private. Now GXS has thrown open the doors to that world and the hype may just turn to reality for a wide range of companies - of all sizes.

Copyright © 2004, IT-Analysis.com

Related news

The return of the dotcom yuppie?
Prison time for cyber stock swindler
Failed dotcom investors' claim thrown out by judge

Next gen security for virtualised datacentres

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Broadband slow and expensive? Blame Telstra says CloudFlare
Won't peer, will gouge for Internet transit
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
prev story


A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.